Legal marijuana sellers face quandary: No armored cars

A Feb. 10, 2012 photo Matthew Huron, owner of two medical marijuana dispensaries and an edible marijuana company in Denver talks about the problems he has faced with banks as he stands in his Good Chemistry dispensary with a sign on the register, CASH ONLY. I've been kicked out of three banks, said Huron. (AP Photo/Ed Andrieski)

“The only way we have to pay our bills is transporting cash from point A to point B,” said DeAngelo, executive director of the medicinal marijuana collective based in Oakland, Calif., with 128,000 patients.

“This includes 15 percent of our $30 million-a-year gross that goes to the cities of San Jose and Oakland and the state of California for our taxes,” he said. “This is a huge threat to the safety of my patients and staff, and beyond that it’s a huge threat to the general public.”

DeAngelo isn’t alone. Several large marijuana dispensaries in California and Colorado received similar notices from their armored vehicle services, said Steve Fox, director of government relations for the Washington-based National Cannabis Industry Association.

The U.S. Justice Department declined to comment on the matter, Ellen Canale, a spokeswoman, said by email in response to repeated requests. The U.S. Drug Enforcement Administration referred questions to the Justice Department, its parent agency.

The end of armored-car service to some marijuana dispensaries underscores ongoing tension between federal law, under which cannabis remains illegal, and laws in 20 states and the District of Columbia that legalized medical marijuana consumption, plus measures in Colorado and Washington that allow those 21 and older to possess up to an ounce of pot.

Attorney General Eric Holder hasn’t provided a federal response to the laws in Washington and Colorado that will also allow retail sales of pot next year.

The U.S. Senate Judiciary Committee will hold a hearing on the conflicts between state and federal marijuana laws on Sept. 10, Chairman Patrick Leahy, D-Vt., announced Aug. 26.

Federal laws bar banks from offering accounts to pot shops, forcing medical marijuana firms to pay their sales taxes and other bills in cash. Cannabis businesses also are unable to obtain credit cards.

Fox, of the cannabis trade group, said that other medical marijuana dispensaries affected by the issue didn’t want to come forward because of security concerns.

“In Colorado, one of our larger members told us that the DEA told their armored-car provider they couldn’t provide services,” he said. “As you can imagine, no one who is being put in a situation where they have to have large amounts of cash unsecured is going to want their name in the paper.”

The suspension of armored-car service is the latest in what marijuana advocates say is an increasing number of federal enforcement actions against cannabis firms.

Federal officials have conducted 270 raids on medical cannabis providers since the start of the Obama administration, compared to 260 during George W. Bush’s eight years in office, according to a June report by Washington-based Americans for Safe Access, a nonprofit representing patients.

The review found that the Obama administration spent more than $289 million over four and a half years on enforcement, about $100 million more than Bush did in his eight years in office.

Harborside Health Center’s DeAngelo said his collective is being audited by the Internal Revenue Service, which asked for detailed financial records.

His seven-year-old not-for-profit assured the city of Oakland in a safety plan it filed before it opened that it would use armored car services and that this is “one of the reasons the city felt we would run a safe facility,” he said.

Rebecca Kaplan, an at-large Oakland City Council member, said the city’s confident its regulation of dispensaries keeps them safe, yet it’s concerned the end of armored-car service places residents in harm’s way.

“There is no benefit to shifting medical cannabis funds out of armored cars and into public vehicles,” said Kaplan, who was re-elected to a second four-year term last year.

“To require medical marijuana dispensaries throughout the nation to use unguarded cash systems — no rational person wouldn’t understand they are creating an environment to support muggings, to support burglaries and to support crime,” she said.

Kaplan said she called the city attorney’s office to explore the city’s legal options.

DeAngelo credits Harborside’s investment in a 36-camera security system, biometric locks and a bank vault that is reinforced with 18 inches of concrete with preventing criminal incidents. Keeping cash on the premises may render that plan moot, he said.

“Some businesses do not want to go public because they fear they would be targeted for violent robberies,” he said. “I also naturally have that concern. I think this is such an outrageous threat to public security that somebody had to be willing to stand up and talk about it.”